Monday, December 22, 2008

De Facto or Dejure?

Trade's shrinking. But it's unclear whether the shrinkage is because of rising protection, or because of overall declining economic activity. In particular, China is exporting less, but at the same time there are stories of increased availability of consumer goods within China, partly due to a natural decrease in demand. The Economist warns of possible increases in protectionism. They can cite for evidence is an increase in antidumping cases, but in this economic environment it may be more likely that firms will engage in actual dumping, so I'm not sure that's a good measure. I'd like to see them tell me of specific cases of actual increases in direct protection before I get too worried. Hopefully, economies will recover from the downturn before resorting to new tariff increases.

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